By Malini Bhupta
HSBC group will invest $6 billion in India, a key market for the group, over the next five years. Surendra Rosha, Group general manager & CEO, HSBC India, tells Malini Bhupta the bank offers a unique proposition to its international customers in India, as also Indian businesses on their needs overseas. Edited excerpts:
The pandemic has been a big disruptor. How has it impacted banking globally?
The global economy suffered a severe contraction on account of the pandemic and the banking sector was obviously not immune to it. Of the many things the pandemic led to, most significant was that it forced businesses to think differently and work around constraints to find the way forward. It helped to build up a certain degree of flexibility and resilience in a short span, which might have been difficult in regular times. It also accelerated the move towards all things digital. Our clients across segments increasingly transitioned towards digital adoption. This ensured that our servicing abilities were not compromised on account of the lockdown and social distancing. I believe that a substantial part of our banking activities could eventually move towards digital, self-serve models.
The pandemic also resulted in a greater focus on global supply chains and supply chain resilience became a key metric for many management teams and boards. The reshaping of global supply chains also brought into sharp focus India’s role in global manufacturing. Even prior to the pandemic, we had been actively engaging with the Government of India on the reform initiatives, as also to understand how ecosystems and supply chains are evolving. This has helped unearth sectors with growth potential, where we can help nurture the ecosystem. We aim to play a pivotal role in supporting anchor corporates and their suppliers’ ecosystem to strengthen their supply chains, including exploring (and executing) the transition to India.
India is an important market for most global banks with a presence in India. What is your plan for India over the next few years?
India is a key component of the HSBC Group’s growth story. In the Group’s annual financial results announced recently, HSBC India recorded a PBT of over $1 billion, that too in a challenging year. HSBC India is currently the third largest contributor to the Group’s profits. Our global network is the core strength of the bank. We aim to continue strengthening the linkages between our global customers and their India needs, just as we seek to serve Indian customers on their global needs. Transaction banking, covering cash management, custody, trade and foreign exchange, is a focus area for us. While the pandemic disrupted global trade, we believe the trade is poised to grow, with India deepening its trade linkages post the pandemic. On the retail side, India has one of the largest diaspora of all and many of its members have banking needs in India. Our ability to connect those who live, work or study across our other markets, back to India makes for quite a unique proposition. Also very important is India’s increasing capital needs and its growing share in global investor portfolios. We serve these investor clients, be they pension funds, sovereign wealth funds, or insurance companies across many markets and will continue to meet their India needs.
Fintechs are set to challenge banks like never before, resulting in many banks partnering with them and even investing in them. How do you see the role of banks changing in times to come?
The emergence of fintechs over the last few years has been good for the banking sector. They have brought a sense of urgency to the digital agenda in financial services. Innovation has become a central area of focus for us and many of our peers. We believe there is a tremendous opportunity for banks to partner with fintechs in specific segments. Such a collaborative approach will be good for the larger banking ecosystem. We have worked with fintech partners in the recent past, in the areas of transaction banking and retail banking. We will continue to do so in the coming years, collaborating in segments where we see opportunities to work together.
Digitisation is the new buzzword, with the pandemic accelerating the pace of the phenomenon. How is HSBC responding to the new normal? What about the challenges posed by digitisation, like the rising number of cyber-attacks?
The pandemic certainly helped in greater adoption of digital banking channels. At HSBC, however, digital evolution has been an ongoing endeavour. We have been at the forefront of the digital payments ecosystem as well as trade finance, pioneering the adoption of blockchain technology. While digitisation has led to a greater number of online frauds and cyber-attacks, we have been constantly testing our systems and capabilities against malware and cyber-attacks. We are investing in security systems and periodically upgrading our offerings to ensure our customers are secure against cyber-attacks and malware.
Which segments in India are you most excited about as a global bank? And what are you doing to grow in them?
We have three lines of business – global banking and markets, commercial banking and wealth and personal banking. Our growth imperatives for all the three lines of business are well articulated. As an international bank, our global network straddles key economic corridors. This means we are uniquely placed to support the needs of our clients and help bolster international trade.
One of the areas I’m most excited about is the emergence of sustainable financing and the growth in renewables. We believe businesses have a great opportunity to help address ecological concerns and areas like climate change need solid strategy, expertise and fast delivery. Globally, the HSBC Group is committing between $750 bn to $1 trn over the next nine years to help businesses reduce their carbon footprint. We will thus be keen to support Indian businesses in this journey.
With globalisation having come under a cloud, do you see the movement of capital being impacted?
The pandemic certainly had an impact on globalisation and international trade. It changed the contours of international trade as supply chains were severely disrupted. However, from a long-term perspective, I’m confident international trade will continue to thrive; we’re already seeing the first signs of revival. This will throw up new opportunities as well as challenges for different countries. But the undertying reasons for international trade, for movement of capital, and the larger need for an integrated global economy will certainly not diminish.
From an India standpoint, as the reforms of the last 18 months take hold and it makes a serious push for privatisation, I see India’s share of global trade in goods and services increasing materially over the next five to seven years. Similarly, international capital will play a key role in funding India’s ambitions to build infrastructure and manufacturing capacity.
HSBC is stepping up investments in Asia. What is the plan for India?
Asia has always been a core engine of growth for the Group. In its financial results announced recently, the Group has outlined investing around $6 bn over the next five years in its Asian operations, including India. India continues to be attractive from a long-term perspective, given its growth rate, demographics and overall digital framework. We believe it will continue to perform well and its international requirements, whether of capital or trade, will grow. We will keep investing in our capabilities to serve our international clients in India, as well as the overseas needs of our Indian customers. Our unique ability to connect across economic corridors is key to our growth ambitions, and makes us positive about our prospects in India.